California Federal Magistrate Judge Approves $175,000 Class Action Settlement for Employer’s Alleged Violation of FCRA’s Stand-Alone Disclosure Requirement

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A federal magistrate judge in the Northern District of California approved a class settlement of nearly $175,000 for an alleged violation of the FCRA’s stand-alone disclosure requirement. The class was comprised of over 1,000 job applicants who signed a standard form as part of their application, which included both a consumer report disclosure and a liability waiver. The case is Taafua v. Quantum Global Technologies.

According to the complaint, defendant Quantum Global Technologies, LLC (QGT) is a company that provides outsourced cleaning and engineering services for process tool parts. Plaintiff Paniani Taafua applied for and obtained employment with QGT. During the application process, QGT required each applicant to sign a standard form authorizing QGT to obtain a consumer report on the applicant from a third-party background screening company. In addition to the consumer report disclosure, however, the form also included a liability waiver. Taafua asserted that the inclusion of the liability waiver violated the FCRA, which requires a person seeking to procure a consumer report for employment purposes to first provide the applicant with a “clear and conspicuous disclosure . . . in a document that consists solely of the disclosure,” and to obtain the applicant’s written consent. As the court noted in an earlier order, “The Ninth Circuit has held that this provision unambiguously requires a disclosure document that ‘consists solely of the disclosure,’ and does not permit the inclusion of a liability waiver in the same document.” See Syed v. M-I, LLC, 853 F.3d 492, 503 (9th Cir. 2017). Taafua filed suit on behalf of himself and over 1,000 other job applicants. In support of his claims, he alleged he “was confused by the standard disclosure authorization form and did not understand that [QGT] would be requesting a consumer report as defined in the FCRA.”

The court denied an earlier settlement payment of $125,902 because it appeared to account for a potential statute of limitations defense that did not apply to half of the settlement class and because the court disapproved of the proposed attorney’s fees and service award to Taafua. The parties subsequently agreed to a total settlement of $174,980. The court found this amended settlement was “reasonable in light of the risks Mr. Taafua would face in litigating this matter,” particularly noting QGT’s arguments that its liability should be limited to individuals who could show they were actually confused by the inclusion of the liability waiver and would not have otherwise signed the form, and that many of the plaintiffs’ claims, including Taafua’s, were potentially untimely.

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